Energy Action: The reported movement of Saudi troops Energy Action: The reported movement of Saudi troops to the Yemen border has likely been the main driver of the oil price spike this afternoon, as Reuters reports artillery and armor moving into defensive positions. The action comes as Yemen moves closer to civil war. NYMEX crude has rallied nearly $2.50/bbl from session lows, peaking at $49.43, and now eying the key $50 mark.

Treasury Action: intermediate yields backed up Treasury Action: intermediate yields backed up in the wake of the mixed results on the 5-year auction, leaving the current 5-year yield over 1.38% from the 1.37% area into the sale, compared to the 1.387% award rate and session lows of 1.34%. The 50% retrace of the 2015 swing arrives near 1.43%, which may attract initially.

12:45 EDT

Treasury 5-year auction preview: the auction should be solid Treasury 5-year auction preview: the auction should be solid, if the 2-year FRN results are any indication. Indirect bidders have continued to underpin demand most of this year, and that should again be the case today, especialy as many sovereigns with the same 5-year maturity are much lower in yield (the German 5-year trades at -0.076%). Indirect bidders took over 60% at the last two auctions. Also the note has cheapened a bit too, though it was after comments from the moderate Fed voter Lockhart that he'd vote for a rate hike by September at the latest, and that may scare off some potential buyers. The wi has risen to 1.38%, though it's still below the 1.435% on Friday, and it would be the second richest award rate since November 2013. The note is relatively cheap on the curve, with the 5s-30s spread narrower at 109 basis points versus 112 basis points at the start of the week. Also supportive is the record cash paydown for this week's offerings, so there's lots of cash to be put to work. Month- and quarter-end, and Japanese fiscal year-end demand could also trickle down to the belly. The February auction stopped at 1.48% and garnered a 2.54 cover (2.68 average) and a 60.1% indirect bid (53.7% average). Direct bidders took 9.5% last month with primary dealers taking 27.4%.

Treasury Option Action: bearish positioning Treasury Option Action: bearish positioning vs the 10-year has been the main trade of size, according to sources, in otherwise fairly tame conditions ahead of the 5-year auction later. Of note was a buyer of 7.5k May 128/127/126 put butterflies and the 127-00 strike targets a 25 bp move up in cash 10-year (2.135%), as the high yield for the year is 2.269% from the March 6 payroll swing, which roughly coincides with 126-00 on June 10s. Other smaller deals included a bearish buyer of 2k in May 124.5 puts and a bullish buyer of 3.5k in May 130 calls vs the sale of 1.75k in May 129 calls, and a bullish seller of 2k in May 127+ puts. June 10s are roughly flat near 129-025, compared to a 129-125 to 129-01 session range.